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Netherlands: Besloten Venootschaap

General information about the country

The Netherlands is a state consisting of the West European part as well as the Caribbean islands of Bonaire, Sint Eustatius and Saba. The Netherlands, and the islands of Aruba, Curacao and Sint Maarten which have the status of self-government territories, together constitute the Kingdom of the Netherlands (Koninkrijk der Nederlanden).

The Netherlands is a constitutional monarchy. Whilst the king of the Netherlands is the official head of state, he delegates the power to the Parliament and the Cabinet.

The Dutch Parliament consists of two chambers. The first is Eerste Kamer which has 75 seats, and the second is Tweede Kamer which has 150 seats. The second chamber, having the primary authority, is elected in direct universal elections for a period of four years.

Legislation

The Netherlands is a civil-law country and belongs to the Romano-Germanic legal system which was established as a result of development of the Roman law by European universities.

The modern legal system of the Netherlands began to take shape at the beginning of the 19th century. When the Netherlands was declared to be a part of the French Empire in 1810, French law was introduced officially in its territory. Thereafter, in the late 19th and early 20th century, the Dutch law was influenced by the German legislative traditions.

In the last decades of the 20th century, the legal development of the Netherlands demonstrated to other countries new, sometimes unconventional approaches and solutions. These were, inter alia, in the economic and taxation fields.

Corporate characteristics:

Main:

Company type

Besloten Venootschaap

Corporate legislation

Commercial Code of Netherlands

Language of company documents

Dutch

Corporate ending

Besloten Venootschaap, BV

Authorised capital:

Minimum amount

No regulations

Standard amount

No regulations

Standard currency

EUR

Permitted currencies

Any

To be paid

No regulations

Shareholders:

Minimum number

1

Maximum number

No restrictions

Publicly accessible records

Yes

Directors:

Minimum number

1

Local director

Required for tax residency

Status

An individual or a legal entity

Publicly accessible records

Yes

Secretary:

Minimum number

No regulations

Local secretary

No regulations

Publicly accessible records

NIL

Reports:

Filing an Annual Return

Yes

Fiscal year

January 01 – December 31

Financial Statements

Yes

Publicly accessible Financial Statements

Yes

Auditor

Depending on criteria (see below)

Filing a Tax Return

Yes

Corporate taxation:

On trading income

25%

On passive income

In most cases - 0%

Double Tax Treaty network:

Agreements with more than 50 countries

Additional information on taxation

In order for the dividends, or income from capital gains, received by a BV company to be tax exempt, a company must fulfil the principle of participation exemption which is as follows:

it must own at least 5% interest in the subsidiary, and

at least one of the following criteria must be met:

the investment is not a portfolio investment, or

the tax rate of the subsidiary in the country where it is incorporated is comparable to that of the Netherlands ("tax test"), or

passive investments of the subsidiary do not exceed 50% of the total assets ("asset test").

The company’s financial statements must be certified by a licensed auditor if the company meets at least two of the following three criteria:

The number of employees of the company exceeds 50,

The turnover of the company for the financial period exceeds EUR 8.8 million,

The net asset value as at the reporting date exceeds EUR 4.4 million.

Conclusions

A company in the Netherlands is a prestigious instrument that is used mainly for reputable business projects. Preferential tax treatment of passive income also makes this country a popular jurisdiction for the establishment of holding companies.

However, it is important to note that the maintenance of a company in the Netherlands imposes high requirements for compliance with the applicable standards of this jurisdiction.

Establishment and management of commercial companies are regulated by the trust legislation of the Netherlands. This imposes high responsibility on local service providers and company officials. Accordingly, in practice the management of a company in the Netherlands will therefore be carried out by local officials working under the strict conditions of their license.